What is FATCA?
FATCA is the Foreign Account Tax Compliance Act. FATCA was intended to prevent domestic Americans from illegally hiding their taxable wealth in foreign banks, but it has instead created significant hardships for law abiding overseas Americans.
FATCA requires foreign financial institutions (‘FFIs’) such as banks or investment companies to share overseas Americans’ financial data with the IRS. FFIs either sign up with the IRS to send the information directly or share the information with the host countries’ central tax authorities, who then pass it on to the IRS. There is no wealth threshold for the collection of this financial information: if you are an American citizen with an overseas account, then information on that account—no matter the amount of money it contains—will be collected and shared with the IRS. The information collected by the FFIs would require a warrant if gathered on domestic US citizens.
The FFIs collect this information because the US government imposes severe fines upon any FFIs found not to be in compliance. Fines can be up to 30% of all of the FFI’s revenue generated in the United States, which—if imposed—could cripple any financial institution.
To avoid these crippling penalties, banks either diligently comply with FATCA by collecting and sharing their customers’ most sensitive financial information or they choose not to have American citizens as customers at all.
While compliance with FATCA certainly violates Americans’ right to privacy (among others), the most crippling effect is the denial of basic banking services to overseas Americans. These services include checking accounts, savings accounts, retirement accounts, child savings accounts, investment accounts and mortgages. FATCA thus prevents many overseas Americans from participating in the basic financial services needed for everyday life.
Republicans Overseas seeks the repeal of FATCA because FATCA violates several constitutional rights guaranteed to all Americans and because FATCA impedes the ability of overseas Americans to access the financial services necessary for everyday life.
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